South Korea warned of an unspecified "grave measure" if North Korea rejects talks on a jointly run factory park shuttered for nearly a month.
In a television briefing, Unification Ministry spokesman Kim Hyung-suk refused to describe what Seoul would do if Pyongyang does not respond by Friday to a demand for formal working-level talks on the industrial complex in the town of Kaesong.
But Seoul's talk of a "grave measure" may be an attempt to signal it will pull out its remaining workers from the complex.
"There is no change on our stance to support the stable operation and improvement" of Kaesong, Kim said on Thursday.
"But we cannot let this situation continue as it is," he added. "If North Korea rejects our proposal... we have no choice but to take significant measures."
Kim did not elaborate on what steps might be taken, but the ultimatum suggested South Korea was considering a permanent withdrawal from the zone, which normally employs 53,000 workers at 123 South Korean companies.
Al Jazeera's correspondent Harry Fawcett, reporting from Seoul said that the South Koreans have made a very specific offer about normalizing the situation over working-level talks.
"South Korea is getting increasingly concerned about the humanitarian situation for the 180 workers from the South who are still in Kaesong," he said. "They say they have enough food, but not of sufficent quality. They also want a medical team to be allowed in."
The talks proposed by Seoul would be between the respective heads of the North and South committees that oversee Kaesong operations.
The proposal came a day after Seoul announced pan-governmental action to help firms with factories in Kaesong deal with liquidity problems caused by lost production and the cancellation of orders.
Established in 2004 and lying 10 kilometres (six miles) inside North Korea, Kaesong is a crucial hard currency source for the impoverished North, through taxes and revenues, and from its cut of the workers' wages.
There is no change on our stance to support the stable operation and improvement of Kaesong
The project was born out the "Sunshine Policy" of inter-Korean conciliation initiated in the late 1990s by South Korean President Kim Dae-Jung which led to a historic summit with North Korean leader Kim Jong-Il in 2000.
Turnover in 2012 was reported at $469.5 million, with accumulated turnover since 2004 standing at $1.98 billion.
Angered by the South's defence minister remarks on the existence of a "military" contingency plan to protect South Korean staff in Kaesong, the North then pulled out its entire workforce on April 9 and suspended operations.
Since then it has denied repeated requests to send food and other supplies to South Koreans who opted to remain in the zone to maintain their non-running production lines.
Even given the soaring tensions, the North's decision to suspend operations at Kaesong was unexpected, as neither side has allowed previous crises to significantly affect the complex.
Permanent closure would wipe out the last remaining point of contact and cooperation between North and South, which remain technically at war after the 1950-53 Korean War was concluded with a ceasefire rather than a peace treaty.
There are currently 176 South Korean staff still in Kaesong, compared with the usual number of around 850.
"The South is likely to order all remaining personnel to pull out of Kaesong," Cho Bong-Hyun of the IBK Economic Research Institute in Seoul told Agence France-Presse news agency.
"Both South and North Korea are reluctant to become the first one to mention the closure of Kaesong outright in order to avoid responsibility," Cho said.